The issue of transparency is one of the fundamental concepts in administering valuation under the WTO system. As a matter of strong principle the drafters of the WTO Valuation Agreement sought to ensure that the legal and administrative provisions concerning customs valuation should be accessible to the general public. Further, that the provisions should also be sufficiently clear and precise to enable traders to estimate in advance, with a reasonable degree of certainty, the value of their goods for custom purposes. Transparency directly aids trade facilitation and overcomes the uncertainty of traders as to what the valuation determination will be.
1. A number of the rules in the WTO Valuation Agreement address transparency and trade facilitation. Select three such rules, explain each rule and how it benefits traders.
2. Do you agree that the Agreement as a whole is sufficiently clear and precise so that a trader can estimate in advance, with a reasonable degree of certainty, the value of their goods for custom purposes? Explain your viewpoint.
The WTO, stands for World Trade Organization is part of GATT (General Agreement on Tariffs and Trade)which is otherwise also known as the Agreement on Implementation of Article VII of the GATT (Eurasian Economic Commission, 2012). This agreement lays down the rules and regulation which helps in valuing and assessing the value of good which are imported or exported and also helps in determining the value of taxes which would be paid for the import and export of such goods. The WTO Agreement lays down the guidelines for the people which lays down the basic structure and rules for valuing the price of amount of the goods which are imported or exported in the country. It is the basic or the primary system, on which the whole procedure of import or export is based on. It helps in knowing the exact price which would be paid on the import of the goods or the export along with the amount of taxes to be paid, with certain adjustments as necessary (Taxation and Customs Union, 2010).
The WTO agreement of valuation of custom duties aim for deciding a fair, uniform, just and neutral system of valuing of for all the goods related to the exports or imports.
The three rules I have chosen from the WTO Valuation Agreement and which I will be discussing about are:
- Protection of Intellectual Property: All the people who design, invest, discover, or create something new andunique, they generally get their inventions copyrighted. All such people need a guarantee by the government that their invention will be protected and that except them no one else would be using their inventions. Hence, this lae, protection of intellectual property refers to the granting of saving the trademarks, patents, etc or the people from violation and that their music, signs, symbols, patents, etc. will not be used by someone else.(Vandana, 2010)
It is very essential to save a treat secret or an invention as because of it the whole business of a person is running or because of it he stands out from the other people in the business. The technical information, the formulae, manufacturing methods and other tips need not be published or told to the other people. All the public and non-public things like cost structure, marketing plans etc. too need to be protected. (Carsten, 2004)
These inventions and rights help a business enterprise to stand out from other businesses in the market and also helps in achieving a certain level of control in the market. A person can file a case for the infringement of his trademarks or patent rights (World customs organisation, 2015).
- Anti Dumping :Dumping means exported your extra produce in the economy of the other country at a price much lower than the price at which the goods are sold in the domestic price. The goods which are dumped in the other countries are exported and sold at a very low price in the foreign markets. This is termed as an unfair trade practice because it affects the business of the local manufacturers.Hence anti-dumping is the rules which are passed by WTO according to which the countries are forbidden to dump their goods and huge prices in form of taxes are charged. Anti-dumping is provides a relief to the local manufacturers from un-necessary competition.(Chacko.K.T, 2011)
When an article is exported to India at a price lower than the normal price of the good(the price at which the other businesses will sell the similar product), a tax known as anti-dumping duty is levied on the goods which does not exceed the margin of the good.Margin of Dumping refers to the difference in export price and normal price of the good.Export Price is the price at which the goods are exported from the other country whereas the normal price stands for the normal price through which the value can be compared which equals to the price of the good of same business (Customs Valuation Historical Background, 2015). Anti-dumping lawmaintains a cordial relation between the economy of the domestic country and the exporting country.
- Custom Valuation & Origin of Goods: The Agreement on Calculation of the Customs Value of Goods Crossing the Customs Border of the Customs Union dated January 25, 2008, helps in determining the value of goods during the time of customs.The customs value of imported goods is declared by the person exporting the good to the authority. The Resolution No. 376 “On the Procedures for Declaration, Control and Adjustment of the Customs Value of Goods” of Commission of the Customs Union dated 20.09.2010 lays down the procedure of declaring the value of goods to be imported.Custom duties and value added tax (VAT) are expressed as a percentage of the value of goods which is being imported. Hence, it is necessary to lay down a standard or set rules for valuation if the custom duty.
It is essential that the value of goods to be imported or exported is calculated because of-
- Proper collection of taxes
- Proper collection of duties
- Lay down the harmony between local and foreign manufacturers
- Economical balance
- Commercial measures can be applied
- Know and keep a check on the import and export level
WTO (World Trade Organization), also referred as Trade Facilitations, is a n international body which helps in regulating the rules and regulations for trade between countries. It provides a framework to the countries which are a part of WTO and provides the policies to which the countries have to adhere to while trading with each other.The WTO provides the agreements to which all the participating countries have to agree to and they duly sign the agreements which are laid down by the WTO body.
Trade facilitation means easing the policies and measures in the international trade by improving the costs and increasing the efficiency of working at each stage of the import or export procedure.It refers to the simplification of the policies of the trade between the countries.
In determining whether the value of the good, also known as the transaction value, is right or no, the policies of the WTO become handy. With the help of these policies, which list the whole process of valuing the cost and the duties of the goods to be imported or exported, one can calculate the value of the goods, which would cost him at the end, prior to exporting it. The importer and the exporter can calculate the value of the goods prior to the transaction and see whether the deal would be acceptable to both the parties and no.
Valuation under Customs Act, 1962 before the year 1988 was based on normal price concept which meant that the goods were offered for sale and purchased at a price where both the buyers and sellers were not related the law also helped in ascertaining the approximate price of the goods and also helped in determining the value of the goods which it would cost to the buyer and seller both after the transaction becomes successful. The Agreement and rules of the Customs Valuation Rules, 1963 were framed for the purpose of determining the normal price of the goods (Annoynomous, 1994).
The document which is framed by the authorities for the smooth functioning of the value of custom goods and their duties says that the traders need to be aware about their laws and the rules which would save them from exploitation.
In the agreement it has been clearly laid and explained that how the value of the goods will be calculated to improve the system and the whole procedure of import so that internal traders and manufacturers will not be affected with the international trade and due to the country in which items are being exported their economy will not be disturbed by any other country. But according to the current earning capacity of the country and the GDP of the country, the laws which are mentioned above need to be reconsidered not only to maintain cordial atmosphere but also to strike a harmony between different economies of the world.
Annoynomous. (1994). Agreement on Implementation of Article VII.
Carsten, F. (2004). Intellectual Property and the WTO.
Chacko.K.T. (2011). Agreement on Anti Dumping. New Delhi.
Customs Valuation Historical Background. (2015). Retrieved 2017, from www.dov.gov.in.
Eurasian Economic Commission. (2012). Retrieved March 24, 2017, from www.eurasiancommission.org: https://www.eurasiancommission.org
Laws of antidumping in India. (n.d.). Retrieved from www.advocatekhoj.com.
Taxation and Customs Union. (2010). Retrieved March 24, 2017, from https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-customs-valuation_en
Trade Facilitation Implementation Guide . (n.d.). Retrieved from https://tfig.unece.org/contents/WTO-valuation-agreement.htm
Vandana, V. (2010). Intellectual property Rights: Boon to Indian Companies.
World customs organisation. (2015). Retrieved from https://www.wcoomd.org: https://www.wcoomd.org/en/topics/valuation/overview/wto-valuation-agreement.aspx
World Trade Organisation . (n.d.). Retrieved from www.wto.org: https://www.wto.org/english/tratop_e/cusval_e/cusval_e.htm
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